Macquarie leads Aussie RMBS rush with low-doc deal

Macquarie Securitisation, Australia's most active RMBS issuer, has hit the road with its second deal of 2006. Unlike the first offering, the latest A$750 million ($563.9 million) issue is backed by 100% low-documentation loans, whereby borrowers self-certify their income.

It is the third low-doc RMBS from Macquarie, with the previous A$1 billion deal completed in May 2005.

Macquarie Bank and Deutsche Bank are joint leads on the transaction, which was launched via the PUMA Masterfund facility. Marketing began last week, with pricing expected around May 31.

The deal is backed by 2,411 loans with an outstanding principal of A$738.7 million, weighted average loan-to-value of 68.9% and seasoning of 12.4 months. Mortgage cover comes from Genworth and PMI Mortgage Insurance.

Moody's Investor's Service and Standard & Poor's assigned provisional ratings of triple-A to the A$720 million senior notes, with a 2.6-year average life, and Aa2/AA to the 4.9-year A$30 million subordinated piece.

On the previous deal, Macquarie achieved pricing of 23.4 basis points over the Bank Bills Swap Rate (BBSW) for the senior bonds. Market observers expect the spread to be a couple of points inside that this time around.

Macquarie also tapped the market in April with an A$1.4 billion prime RMBS managed by the same leads (ASR, 04/17/06).

Another Aussie issuer tapping RMBS investors for the second time this year is the nonconforming mortgage lender, Interstar Wholesale Finance. Interstar hired Barclays Capital and JPMorgan Securities for the A$1.38 billion global transaction, with roadshows scheduled for cities in Australia, Europe and the U.S.

The deal is backed by 6,908 loans worth A$1.4 billion, average LTV of 73.52% and seasoning of 12.4 months. Low-doc loans account for 18.25% of the pool. Genworth and PMI provide mortgage insurance.

The transaction features a $500 million money market piece, rated F1+/A-1+ by Fitch Ratings and S&P. Additionally, the $500 million senior tranche has been rated triple-A for a 2.96-year expected average life.

Two 4.56-year domestic tranches have also been structured in. The A$30 million class AB notes and A$35 million B-tranche are rated triple-A and double-A by both agencies, respectively.

Interstar completed an A$1 billion issue in March, which saw pricing of 17 basis points over BBSW on the triple-A piece (ASR, 03/20/06).

Meanwhile, another non-bank lender, Homeloans, is prepping its first deal since December 2003. Westpac Institutional Bank is sole-lead on the A$460 million offering, to be sold via the Residential Mortgage Trust vehicle. Pricing was due as of press time.

The transaction is backed by 2,229 loans; 32% of which were extended to self-certified borrowers. The average LTV is 72.9%, with seasoning of 23.7 months. Genworth and PMI again provide mortgage cover.

S&P assigned triple-A ratings to the 2.2-year A$438.8 million senior notes; while the five-year A$21.2 million sub-piece is rated double-A.

The deal featured three 2.66-year triple-A tranches, denominated in U.S. dollars, Aussie dollars and euros. BankWest achieved spreads of eight points over Libor for the $600 million piece; 14 over BBSW for the A$1.4 billion notes and eight over Euribor for the 720 million ($541.3 million) bonds.

According to sources, the deal was sold to 54 investors in 13 countries, with 67% of the paper placing outside Australia.

Although initial price talk suggested 11 to 12 basis points over BBSW for the A$1.472 billion 2.5-year senior notes - rated triple-A by Moody's and S&P - the simultaneous launch of other deals in the market saw the final spread widen to 14 over BBSW. The A$10.4 million sub-piece, rated AA/Aa2, priced at 18 points over BBSW on a 6.4-year average life.

According to NAB, the deal was oversubscribed and placed with 34 accounts.

Pepper took advantage of the prevailing strong sentiment for RMBS by upsizing its sub-prime deal from A$350 million, to A$400 million. Barclays and Commonwealth Bank of Australia jointly led the issue, sold through the Pepper Residential Securities Trust.

Pricing came at the tight end of 19 points over BBSW for the 1.66-year A$280 million A1 super senior notes, rated triple-A by Moody's and S&P, while the triple-A mezzanine piece finished 23 basis points for the same average life.

Spreads across the other three rated tranches varied from 27 basis points for the Aa1/AAA-rated A3 notes to 117 points over BBSW for the triple-B bonds.

The deal was more than two times oversubscribed, with 66% of orders coming from domestic accounts.